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Robo-advisor platforms have become a popular investing solution. Unlike more traditional investment solutions, robo-advisor platforms excel in providing digital tools that enable online account opening, attentive customer support, as well as understanding our online risk assessment to customise investment advice.
Beyond just managed portfolios, robo-advisors are also evolving in the types of services they offer. The local banks, DBS, OCBC and UOB, all offer their own robo-advisory platforms. This means we don’t even need to start a new account with a fintech platform to start investing via a robo-advisory solution.
Today, many robo-advisors also provide cash management accounts, a way for us to boost returns from cash savings through money market funds and short-term bonds. StashAway and Syfe offer a fixed deposit solution.
Platforms such as iFast (FSM MAPS), Syfe Trade and SAXO also enable low-cost stock trading with a brokerage account. SAXO allows us to trade leveraged products such as Forex, CFDs and commodities as well. Endowus, StashAway and Kristal.AI have personalised investment solutions for high-net-worth clients.
Depending on our needs, there are more than 10 robo-advisor platforms in Singapore, we can invest with.
Read Also: Complete Guide To Cash Management Accounts In Singapore
Content:
What Are The Robo Advisor Platforms Available To Singapore Investors?
Investment in Unit Trusts
#1 Endowus
#2 FSM MAPS
Investment in ETFs
#3 DBS digiPortfolio
#4 AutoWealth
#5 StashAway
#6 Syfe
#7 UOBAM Invest
#8 UTrade Robo (UOB Kay Hian)
#9 Kristal.AI
#10 SaxoWealthCare
Investment in Individual Stocks and ETFs
#11 OCBC RoboInvest
Comparison Based On The Amount Invested, And The Fees Charged
Pros And Cons Of Investing With A Robo Advisor
Try A Robo-Advisor For Yourself
What Is A Robo Advisor?
The term “robo advisor” is commonly used to describe digital wealth management platforms that utilise automated solutions and algorithms to help us invest and manage our money. By doing this, robo-advisors can greatly reduce the number of human advisors they employ, while delivering high-quality investment advice more consistently to investors, and are able to scale up operations efficiently.
Robo advisor platforms also make use of digital tools to improve customer experience. We enjoy a paperless and hassle-free online account opening experience from the comfort of our homes. When onboarding clients, digital tools are used to conduct online risk assessments and provide personalised investment advice and solutions. Many robo-advisor platforms also deliver extensive educational content as well as regularly host online and offline educational events for their community.
Similar to unit trusts and ETFs, robo-advisor platforms pool together funds from many smaller investors to create a large and diversified portfolio. This helps smaller investors incur lower sales charges and achieve diversification even if we only invest a small sum of money. In addition, investors can take a passive approach in managing our investments, as well as leverage on digital tools to set investment goals.
What typically differentiates robo-advisory platforms is their investing methodology or philosophy, which is why we should take the time to understand how the robo advisor is investing our money. Increasingly, the types of solutions offered by robo-advisors also distinguish them from one another. While robo-advisor platforms use algorithms to invest our funds, they are ultimately programmed by humans based on financial models and follow a set of rules and instructions.
However, this also means that robo-advisors are participating in the same financial markets and investing in the same asset classes – usually stocks, bonds and money market funds – as regular investors and fund managers. Thus, we will have a realistic expectation of the kind of returns we will receive (and risks we take on).
What Are The Robo Advisor Platforms Available To Singapore Investors?
| No. | Robo-Advisor Platform | Minimum Investment | Yearly Advisor Fees |
| Investments In unit trusts (for main portfolio) | |||
| 1 | Endowus | $1,000 | – 0.25% to 0.6% (cash investments in Core, Income and Satellite portfolios) – 0.4% (CPF and SRS investments in Core, Income and Satellite portfolios) – 0.3% (Cash, CPF and SRS via Fund Smart portfolios) – 0.05% (Cash Management) |
| 2 | FSM MAPS | $100 (per month) $500 (lump sum) |
– 0.35% (Conservative portfolio) – 0.5% (Other portfolios) |
| Investments In ETFs | |||
| 3 | DBS digiPortfolio | From $100 to US$10,000 | – 0.75% (Global, Asia and Income portfolios) – 0.25% (SaveUp portfolio) |
| 4 | AutoWealth | AutoWealth: $3,000 AutoWealth Plus+: $10,000 |
– 0.5% – USD$18 (platform fee) |
| 5 | StashAway | None (Income portfolio: $10,000) | 0.2% to 0.8% |
| 6 | Syfe | None | 0.35% to 0.65% |
| 7 | UOBAM Invest | None | 0.6% to 0.8% |
| 8 | UTrade Robo (UOB Kay Hian) | $5,000 | 0.5% to 0.88% |
| 9 | Kristal.AI | Based on investment | 0.702% – Investment Advisory & Management Services Fees: 0.54% Safe Keeping Fee: 0.162% |
| 10 | SaxoWealthCare | $25,000 | 0.45% to 0.75% |
| Investments In Individual Stocks And ETFs | |||
| 11 | OCBC RoboInvest | From US$100 to HK$350,000 | 0.88% |
Robo-Advisors That Primarily Invest In Funds
As you can see, even between robo-advisor platforms, there are different investment methodologies and costs also vary. Below is more detailed information on each of the robo-advisor platforms in Singapore.
#1 Endowus
Portfolios:
- Endowus Core (Advised portfolio)
- Endowus Satellite (Advised portfolio)
- Endowus Income
- Endowus Cash Smart (Cash Management portfolio)
- Endowus Fund Smart (Design your own customised portfolios)
- Private Wealth and Institutional Clients (tailored for high net worth clients)
Minimum Investment Amount: $1,000 (across all portfolios); $10,000 if you want to invest in its Income Portfolios
Annual Advisor Fees:
- 0.25% p.a. to 0.6% p.a. (investing cash in Endowus Core, Satellite, Income)
- Up to $200,000 – 0.6%
- $200,000 to $1 million – 0.5%
- $1 million to $5 million – 0.35%
- $5 million and above – 0.25%
- 0.4% p.a. (investing CPF and SRS in Endowus Core, Satellite, Income)
- 0.3% (investing cash, CPF and SRS in Fund Smart)
- 0.05% (investing cash and SRS in Cash management portfolio)
Endowus is an independent fee-only wealth advisor, providing high-quality financial advice and creating personalised asset allocation and portfolio for investors. Endowus’ approach is to select the best-in-class funds, while building a globally-diversified and low-cost portfolio for investors.
It pioneered access to funds’ institutional share classes, which were never previously within reach, for retail investors. These funds include world-renowned global investment management companies, such as Dimensional Fund Advisory, PIMCO, First State Investments, Eastspring Investments, Vanguard, Schroders and others.
Besides its Endowus Core portfolio with cash, Endowus also offers investments funded by CPF or SRS monies. Endowus also has a cash management account, Endowus Cash Smart to boost returns on your cash savings.
Endowus Fund Smart was launched to help investors custom-design your own ideal investment portfolios. With Endowus Fund Smart, investors can choose from a curated list of more than 200 funds that have already been identified as best-in-class by its team while automatically accessing the institutional share class.
There is also Endowus Satellite portfolios that you can invest in for exposure to selected themes or market opportunities. As its name suggests, this is to complement your main portfolio rather than be your main portfolio.
Read Also: How The Endowus ESG Portfolios Can Help You Get Exposure In ESG Investments
Endowus also has a personalised investment service for its high net worth clients and institutional clients.
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If you’re interested to start investing with Endowus, you’ll be happy to know that DollarsAndSense readers can enjoy $20 off their access fee (equivalent to $10,000 advised free, assuming an access fee of 0.40%). Sign-up using this link to claim this special offer. Terms & Conditions apply.
#2 FSM MAPS
Portfolios: Globally diversified portfolios, customised into 5 income and 5 growth portfolios, depending on an investors risk appetite
Minimum Investment Amount:
- $500 (Lump Sum)
- $100 (Regular Savings Plan)
Annual Advisor Fees:
- 0.35% (Conservative portfolio)
- 0.5% (Other portfolios)
FSM Managed Portfolio, or FSM MAPS, doesn’t completely leave the analysis and investment decisions to a predetermined algorithm. Rather, its portfolio managers and research analysts study the markets and products available in the market to gain the exposure they desire.
It offers 10 portfolios straddling either Income or Growth investment objective, varying on five risk profiles, from Conservative to Aggressive. Investors have to start with a minimum of $100 for its Regular Savings Plan and $500 for a lump sum investment.
Read Also: What Are The Pros And Cons Of Investing Using A Regular Savings Plan (RSP)
Via FSM, investors can also gain access to a suite of other products, including investing in stocks, bonds, and funds.
Robo-Advisors That Primarily Invest In ETFs
#3 DBS digiPortfolio
Portfolios:
- Global Portfolio
- Asia Portfolio
- Income Portfolio
- SaveUp Portfolio
Minimum Investment Amount:
- Global Portfolios (US$1,000)
- Asia Portfolio (ETF) (S$1,000)
- Income Portfolio (Unit Trust) (US$1,000 or S$1,000)
- SaveUp Portfolio (S$100)
Annual Advisor Fees:
- Global Portfolio (0.75%)
- Asia Portfolio (0.75%)
- Income Portfolio (Unit Trust) (0.75%)
- SaveUp Portfolio (0.25%)
DBS digiPortfolio provides investors with four portfolios – Global Portfolios, Asia Portfolio, Income Portfolio and SaveUp – consisting of the best funds from DBS’ platform.
Its Global Portfolio offers three portfolio based on your risk appetite: Slow n Steady (most conservative); Comfy Cruisin; and Fast n Furious (most aggressive). It comprises mainly globally diversified UK-listed ETFs, and is aligned with views from the DBS Chief Investment Office.
Its Asia Portfolio also offers three portfolios based on your risk appetite: Slow n Steady (most conservative); Comfy Cruisin; and Fast n Furious (most aggressive). This portfolio is be made up of Singapore-listed ETFs that invest across Asia.
The Income Portfolio has both equity and bonds exposure, with an aim to generate a regular quarterly payout of 4% per annum. Its portfolio consists primarily of REITs, Asian equities and bonds.
DBS digiPortfolio’s SaveUp portfolio is meant for risk-averse investors who have lower risk appetites and prefer returns to have lower volatility. It invests in fixed income only.
As its portfolios may be purchased in SGD and USD, customers are required to also open a Multi-Currency Account with DBS. This can include the popular DBS Multiplier Account, My Account, eMulti-Currency Autosave (eMCA), eMulti-Currency Autosave Plus (EMCA+) or Multi-Currency Autosave Plus. This is one of the benefits of investing with a bank’s robo-advisory, as you can also use its other services.
Another benefit of using a bank-led robo-advisory solution is that benefits may span across its solutions as well. For example, when you invest at least S$1,000 with DBS digiPortfolio, you can boost your interest return on cash holdings in your DBS Multiplier Account up to 3.5%.
Apart from its 0.75% to 0.85% advisor fee, there are no other sales charges, platform fees, or switching fees.
Read Also: Investors In Singapore: What Is SIP Accreditation And Should You Get It?
#4 AutoWealth
Portfolios:
- AutoWealth Starter: Globally diversified stocks and government bonds
- AutoWealth Plus+: Thematic portfolios
- Flexi Cash USD
Minimum Investment Amount:
- AutoWealth Starter: $3,000
- AutoWealth Plus+: $10,000
- Flexi Cash USD: $1,000
Annual Advisor Fees:
- AutoWealth Starter and AutoWealth Plus+
- 0.5% p.a. (Management fee)
- USD$18 p.a. (Platform fee)
- Flexi Cash USD (0.1% p.a.)
AutoWealth is a simple and easy-to-understand robo-advisory solution. Its primary AutoWealth Starter portfolio comprises a mix of stocks and government bonds spanning U.S., Europe and Asia Pacific. The AutoWealth portfolio tracks the MSCI All-Country World Index and the FTSE World Government Bond Index, with ETFs listed on the New York Stock Exchange (NYSE) and NASDAQ.
Its AutoWealth Plus+ portfolio enables you to gain exposure to a thematic portfolio that you may want greater exposure to. It currently offers five thematic portfolios:
1) The Future of New Economies portfolio: with greater emphasis on exposure to China, Taiwan, India and South Korea
2) Future 2050 portfolio: to gain exposure to futuristic multidecade macro trends, such as technology and healthcare
3) Future of Digital Economy portfolio: providing greater allocation to Fintech, Internet and E-commerce companies
4) Growth & Momentum portfolio: invest in growth and momentum companies with favourable multi-factor characteristics backed by rigorous and well-established empirical studies
5) Pandemic Turnaround portfolio: gain exposure to sectors that are temporarily depressed or likely to benefit from the pandemic, including consumer discretionary, lithium, clean energy, aerospace & home construction companies.
AutoWealth’s Flexi Cash USD portfolio enables investors to access US Treasury Bills ETFs. It also has a Flexi Cash SGD portfolio in the works, which will offer SGD-denominated money market funds.
AutoWealth also assigns clients a wealth manager who is readily available via whatsapp. AutoWealth’s fees are also structured slightly differently from other robo advisors, with both a management fee of 0.5% p.a. and an annual platform fee of USD$18.
Read Also: Step-By-Step Guide To Opening An AutoWealth Account For New Singapore Investors
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#5 StashAway
Portfolios:
- General Investing
- General Investing Powered by StashAway
- General Investing Powered by BlackRock
- Responsible investing with ESG
- Thematic portfolios
- Flexible portfolio
- Income portfolios
- Invest your SRS
- StashAway Simple (Cash Management portfolio)
- StashAway Simple
- StashAway Simple Plus
- StashAway Simple Guaranteed
- StashAway Reserve (for Accredited Investors)
Minimum Investment Amount:
- General Investing and other portfolios: none
- Income portfolio: $10,000
- StashAway Simple: none
Annual Advisor Fees:
- Goal-based and income portfolios:
- First $25,000 – 0.8%
- Additional amounts above $25,000 to $50,000 – 0.7%
- Additional amounts above $50,000 to $100,000 – 0.6%
- Additional amounts above $100,000 to $250,000 – 0.5%
- Additional amounts above $250,000 to $500,000 – 0.4%
- Additional amounts above $500,000 to $1 million – 0.3%
- Additional amounts above $1 million – 0.2%
- Single ETF Flexible Portfolio – 0.3%
- StashAway Simple:
- StashAway Simple – 0.15%
- StashAway Simple Plus – 0.2%
- StashAway Simple Guaranteed – 0%
StashAway employs a proprietary investment strategy they call Economic Regime-based Asset Allocation (ERAA), based on the theory of economic cycles. Through monitoring changing economic indicators, they rebalance the asset allocation mix of customers’ portfolios accordingly.
Apart from its own General Investing portfolio, StashAway also introduced a General Investing portfolio powered by BlackRock. This solution enables investors to leverage on insights and asset allocation guidance by BlackRock, based on four risk levels, while StashAway takes care of the trades and servicing aspect.
You can also invest your Supplementary Retirement Scheme (SRS) funds via StashAway, as well as invest in its Singapore-focused income portfolio, comprising the STI ETF, Singapore government bonds ETF, corporate bond ETFs, REITs ETFs. StashAway also offers thematic portfolios, such as Technology Enablers, The Future of Consumer Technology, Healthcare Innovation and Environment and Cleantech.
Read Also: StashAway Income Portfolio: How You Can Get 3.75% Dividends From your Investments Each Year
For greater control over your portfolio, you can utilise StashAway’s Flexible portfolios to build a customised investment portfolio. You can choose to invest in ETFs provided by some of the world’s top fund managers, including iShares (by BlackRock), Vanguard, SPDR, Ark Invest and more.
StashAway also offers cash management accounts. StashAway Simple has a projected return rate of 3.7 % p.a. StashAway Simple Plus has a projected return rate of 4.9% p.a. Given the higher projected return, we should expect to take on slightly higher risk when investing in StashAway Simple Plus. StashAway Simple Guaranteed invests in fixed deposits, and currently has a projected rate of 3.8%. Since its underlying investment is a fixed deposit, there is a lock-in of 6 months.
They also provide private equity and venture capital investing through its StashAway Reserve portfolio, for accredited investors.
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For those who are interested to try the StashAway platform for yourself, StashAway is giving 50% off in management fees for 6 months, for up to $50,000 in portfolio value.
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Read Also: Supplementary Retirement Scheme – 4 Things You Need To Understand Before Opening An SRS Account
#6 Syfe
Portfolios:
- Core portfolios
- Core Equity100
- Core Growth
- Core Balanced
- Core Defensive
- Satellite portfolios
- REIT+ portfolio
- 100% REITs
- REITS with Risk Management
- Themes
- China Growth
- Disruptive Technology
- ESG & Clean Energy
- Healthcare Innovation
- REIT+ portfolio
- Income Portfolio
- Income+ Preserve
- Income+ Enhance
- Custom portfolio
- Cash portfolios (cash management account)
- Cash+ Flexi
- Cash+ Guaranteed
Minimum Investment Amount: None
Annual Advisor Fees: 0.35% p.a. to 0.65% p.a.
- Blue Tier: $20,000 and below: 0.65% p.a.
- Black Tier: Above $20,000: 0.5% p.a.
- Gold Tier: Above $100,000: 0.4% p.a.
- Private Wealth: Above $500,000: 0.35%
Syfe uses an Automated Risk-managed Investments (ARI) strategy, their proprietary investment methodology, which automatically adjusts your portfolio to ensure enhanced risk-adjusted returns by managing your portfolio’s downside risk.
Unlike many other robo advisors, Syfe’s main portfolio is diversified into not just equities and bonds, but commodities as well. It does so via ETFs listed on the US stock exchange.
Read Also: Investing With Syfe: 5 Things You Need To Know About Singapore’s Newest Robo-Advisor
Complementing its Core portfolios, Syfe also enables investors to build satellite portfolios, including Syfe REIT+, thematic portfolios, and custom portfolios, to give users more investment choices. Investors can also build an Income portfolio via Syfe’s Income + Preserve and Income+ Enhance solutions.
In addition, Syfe also has its cash management accounts, Syfe Cash+ and Syfe Cash+ Guaranteed.
Syfe Trade is its a brokerage service for you to buy and sell U.S. and Singapore stocks. Syfe Trade offers up to five free trades a month and gives you the option to purchase fractional shares in over 10,000 U.S. stocks and ETFs for as little as US$1.49 per trade
If you are interested to get started on investing with Syfe, DollarsAndSense has an exclusive partnership with Syfe – enjoy 0% management fee for the first $30,000 during the first 6 months after you sign up. Apply here to enjoy the promotion.
#7 UOBAM Invest
Portfolios:
- Core
- Satellite
Minimum Investment Amount: $1
Annual Advisor Fees: 0.6% p.a. to 0.8% p.a.
- $25,000 and below: 0.8% p.a.
- Above $25,000: 0.6% p.a.
Launched by UOB Asset Management, UOBAM Invest employs a Glide-path model to gradually allocate funds towards safer assets as investors move closer to their target goal completion date. UOBAM Invest has recently updated its solution to two distinct products: Core portfolio and Satellite portfolio.
In its Core portfolio, you can invest in a guided portfolio. Its Satellite portfolio allows you to explore either a DIY method to build your portfolio or invest in its Megatrends Portfolio shaping Asia’s post-pandemic world – which include Changing demographics, Going Green and The Digital Economy.
Via the UOBAM Invest app, you also have access to Fund Direct, where you can also buy funds directly
#8 UTrade Robo (UOB Kay Hian)
Portfolio: Global Multi Asset Portfolio
Minimum Investment Amount: $5,000 per portfolio (minimum subsequent investment is $500)
Annual Advisor Fees: 0.5% p.a. to 0.88% p.a.
- $50,000 and Below: 0.88%
- Above $50,000: 0.68%
- Above $100,000: 0.5%
UOB Kay Hian’s UTrade Robo invests in multi-assets, including stocks, bonds and commodities, as well as globally diversified portfolios. It selects low-cost ETFs listed globally to represent each asset class.
On its website, UTrade Robo states that it utilises the Modern Portfolio Theory to allocate among asset classes to determine the maximum expected returns for a given level of risk.
While it has a minimum investment amount of $5,000 per portfolio, subsequent top-ups of investments can be made with a minimum amount of $500.
#9 Kristal.AI
Portfolios: 5 Thematic Portfolios
Minimum Investment Amount: based on investment
Annual Advisor Fees:
- Singapore Residents:
- Investment Advisory & Management Services Fees: 0.54%
- Safe Keeping Fee: 0.162%
- Non-Singapore Residents:
- Investment Advisory & Management Services Fees: 0.50%
- Safe Keeping Fee: 0.160%
Kristal.AI offers several types of investment portfolio, many catered to Accredited Investors. These include Institutional Funds, Private Markets, and Structured Products. Retail investors can invest in one of its 5 Automated Portfolios:
1) Kristal High Growth: Ideal for high-risk investors focused on aggressive capital appreciation over a longer period.
2) Kristal Growth: Ideal for medium-risk investors focused on both safety and capital appreciation over a longer period.
3) Kristal Secure: Ideal for low-risk investors focused on safety and expecting slightly higher alpha over traditional deposits.
4) Kristal Balanced: Ideal for low to medium-risk investors focused on both safety and capital appreciation over a longer period.
5) Kristal All Weather US: Ideal for investors looking to gain a diversified exposure to various asset classes with the objective of balanced growth.
Investors can also access Kristal.AI’s algorithm-based advisory for an ETF portfolio based on their investment amount and risk appetite.
#10 SaxoWealthCare (Saxo Markets)
Portfolios:
- Global Growth
- Asian Growth
- Sustainable Growth
Minimum Investment Amount: $25,000
Annual Advisor Fees:
- First $50,000 – 0.75%
- Next $50,000 – 0.70%
- Next $100,000 – 0.60%
- Next $800,000 – 0.55%
- Above $1 million – 0.45%
In 2022, Saxo Markets introduced SaxoWealthCare, billing it as the first fifth-generation digital wealth manager in Singapore.
Customers will be led through three stages when designing their portfolio, starting with identifying their risk profile. At this stage, customers can also choose to enable the Portfolio Protector feature, which acts as an added safeguard against market volatility. It will activate when the portfolio value drops to a pre-set threshold and switch to being a minimal-risk investment with a higher bond allocation.
The platform invests in a combination of stock and bond ETFs based on a choice of three trading styles, namely, Global growth, Asian growth, and Sustainable growth. The platform also allows for multiple goal settings and regular investment contributions for the investor to reach their target goal.
Investments In Individual Stocks And ETFs
#11 OCBC RoboInvest
Portfolios: 38 thematic portfolios across 7 markets
Minimum Investment Amount: From US$100 to HK$350,000 (From $137 to $61,000)
Annual Advisor Fees: 0.88% p.a.
OCBC RoboInvest offers a diverse selection of 38 thematic portfolios across three risk tolerance levels – low, medium, and high – for its investors. Uniquely, it is the only platform offering the ability to get invested into individual stocks and ETFs within the themes we select.
Its minimum investment amount starts from US$100 which is offered for several portfolios. However, the minimum investment amount can go up to several thousand dollars, typically under US$5,000, depending on the portfolio investors choose. On a Hong Kong-focused tech portfolio, we found that it required a minimum investment of HK$350,000, which amounts to nearly $60,000.
Investors can choose a lump sum investment or monthly investments that are only available for selected portfolios.
OCBC RoboInvest also charges its investors exchange-related fees and charges incurred when buying and selling the portfolios.
How Robo Advisors In Singapore Typically Work
Each platform has its own unique ways of offering a robo advisor financial service, but the broad overview is the same:
Step 1: Sign-up and answer a detailed questionnaire about your risk appetite and intended investment time horizon.
Step 2: Fund your account, either on a lump sum or monthly basis.
Step 3: Upon receiving your funds, your robo advisor will then purchase a mix of ETFs (and if applicable, other assets) that corresponds to what they consider “optimal” based on your profile and the current market conditions.
Step 4: The robo advisor will monitor the market and perform rebalancing when necessary to manage risk and maximise potential returns.
As far as we can tell, all of the robo advisors make the majority of their investments in US and global ETFs with exposure to a variety of asset classes including equities, bonds, gold and other commodities.
We typically also incur additional fees for trading/clearing investments.
Pros And Cons Of Investing With A Robo Advisor
Pro #1: You Don’t Need a Large Amount of Capital
When investing as an individual, there are minimum trade sizes and high transaction costs imposed on the account, and this makes investing as an individual cost-prohibitive. Robo advisors allow you to own fractional portions of ETFs, which is impossible to do on your own unless you have a large capital.
Pro #2: Diversification
Because of the scale that technology enables, robo advisors can offer detailed monitoring of market indicators and apply sophisticated investment strategies based on them, much like what mutual funds provide, but at lower cost.
Pro #3: Personalised Portfolio
Rather than needing to pick from a list of mutual funds that you think best fit your needs, robo advisors can give you a portfolio mix that is more finely tuned to your needs (as the robo advisor deems to be appropriate), though not completely personalised on an individual level.
Pro #4: Passive Approach
The idea with robo advisors is that you do not need to rebalance your portfolio as market conditions change. Rebalancing is done by robo advisors for you, automatically.
Read Also: 3 Important Differences Of Automated Investing From Traditional Investing
Pro #5: “Low Fees”
Robo advisors generally charge lower annual management fees than professionally managed funds do. We all know that fees have a compounding effect that eats into our returns, especially over the long term. The higher the fees, the less returns we enjoy for the same amount invested and asset performance.
This point about “low fees” does come with a caveat. While robo advisor fees are admittedly lower than what mutual funds charge, it is still an additional cost that you are incurring, as opposed to buying the ETFs yourself and managing your own portfolio. So you need to decide if the value robo advisors provide is worth the fees you pay, over the long-term.
Con #1: Letting Emotions Get In The Way
Even though you automate the investment process, your emotions can still sway your decisions. This means panic selling during a downturn or making the decision to sell after an upswing in the markets.
Con #2: Forgetting Your Long-Term Investment Needs
Because you automate your investments, you may think it is well taken care of. However, you may forget to increase your investment size as you progress in your career and earn more or when you have more children.
Con #3: Currency Exchange Spread and Risk
Typically, in Singapore right now, robo advisors tend to be heavily invested in US-based ETFs. This means your money will be subject to USD conversions at spot rates, as well as incurring currency conversion fees charged by brokers.
Con #4: The Fees
It might be ironic to say that the fees are a reason not to use robo advisors, since they are one of the draws. However, as mentioned earlier, robo advisor fees are recurring costs, which are on top of underlying fund-level fees or Total Expense Ratio (TER) that may also be charged. Finally, as mentioned, there is a currency conversion fee you also need to be aware of.
If you like the benefits of what ETFs offer and are willing to put in some time and effort to do-in-yourself, then you would be able to save quite a bit, especially over the longer-term. So you need to evaluate if you really need a “purely passive” option that robo advisors provide, or can spare some time to periodically review and manage your portfolio.
Read Also: Fund Management Costs: 3 Ways Your Returns Are Being Eroded By “Hidden” Charges
Con #5: Lack of Flexibility
The whole idea of robo advisors is that you take the emotion out of investing, and that they help you to make “smart” choices based on their algorithms. However, what happens when you do not agree with the choices made by the robo advisor?
If you have a particular opinion or insight that you think isn’t picked up on by the robo advisor, then you might want to give them a miss. Also, you cannot choose a specific ETF to include (or exclude), which can be irritating, since a portion of your money is deployed in something you do not believe in.
Con #6: Tax On Dividends
Many of these robo advisors buy ETFs listed in the US, your dividends are subject to a 30% dividend withholding tax. What that means is that your dividend returns are lesser compared to buying ETFs listed elsewhere. It is unclear whether the robo advisors take this 30% dividend tax into account when doing their projections.
Try A Robo-Advisor For Yourself
Since it doesn’t cost you anything to register and tinker around with the platforms, you should do it and see for yourself how robo-advisors allow you to easily set your risk profile, get insights into your portfolio, and project your investment returns.
If you’d like to try a robo-advisor for yourself, DollarsAndSense has partnered with Endowus, StashAway, AutoWealth and Syfe to give you a headstart on your robo-investing journey.
Endowus is offering DollarsAndSense readers $20 off their access fee. Sign-up using this link to claim this special offer. Terms & Conditions apply.
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This article was first published on 2 March 2018 and has been updated to include the latest information.
The post Robo Advisors In Singapore (2024): What You Need To Know Before Investing appeared first on DollarsAndSense.sg.
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